We Have Added New Section - REITs Paying Monthly Dividends
December 8, 2013 11 pm
We have added a new section in REITs above-- REITs - Paying Monthly Dividends. This is primarily a convenience list--easier to have a list than pick through the 196 available REITs. Additionally some find owning monthly paying securities of all types more desirable as it evens out the dividend income flow.
Some Important Questions and Reader Obervations
December 8, 2013 - 7 pm
We have received a couple questions on items and we think they are deserving of some attention although to some degree we have posted our observations previously.
First is in regards to Preferred Stock Closed End Funds. "With potential tax loss selling in the weeks ahead and yields likely to move to the 10% area-are they good buys?" We track the Preferred Stock CEFs and their Net Asset Values (NAV) and on average all Preferred Stock CEFs are off about 21% for the year--and currently the average yield is 8.83% (with some ranging to 9.2% to 9.6%). We noted here that it appeared psychology looked like it may be changing. And here 2 days later we commented further. Please NOTE that preferred stock CEFs were at a low for the year on Friday---BUT the rate of decline relative to the 10 year treasury yield increase was substantially lessened than a month or two ago and we think investors are finally accepting the fact rates will move higher and are less focused on wholesale dumping. We think CEFs will trickle down more in the next months--and at a 10% yield mark one would be very justified in having exposure to these--for us we would think around 5% of a portfolio would be a reasonable exposure.
Secondly a reader observed that their high quality bonds have moved down very little if they have maturities in the next 2-5 years. Some of the seasoned fixed income investors know this to be a normal truism and have tried to concentrate their buys in this arena. Contrary to Preferreds with perpetual maturities (no maturity) and exchange traded debt with maturies in far out years (say 2050 and some all the way out to 2100) which have gotten totally creamed regardless of quality those with close in maturities have barely moved (in fact we own some Term Preferreds from Gladstone (and we hate all the Gladstone companies fundamentally) that have been some of our best performers and trade at or above their price from 9 months ago because they must be redeemed in 2016). Because of this we do publish a list of Term Preferreds and Exchange Traded Debt issues with maturies in the next 10 years (although we slip in a few others). Looking at this list you will note virtually all of them trading around Par -- quite a few actually trade above Par. One of our favorite Ultra Conservative issues is on this list - we have recently bought a little -- Tortoise Energy Infrastructure Capital 4.37% Mandatory Redemption Preferred (TYG-B). This has a current yield of 5.23%, with a yield to maturity of near 6%---but best of all this issue is rated AA by Fitch. It has a mandatory redemption in 2027.